Oil steadies as U.S. supply concerns ease but Iran tensions loom

FILE PHOTO: Oil pumps are seen after sunset outside Vaudoy-en-Brie, near Paris, France November 14, 2018. REUTERS/Christian Hartmann

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices steadied on Tuesday as a resumption of production in the Gulf of Mexico after Hurricane Barry and a boom in U.S. supply from shale oil countered tensions in the Middle East.

Uncertainty about China’s economic prospects also pressured prices after data on Monday showed that growth in the country slowed to 6.2% from a year earlier, the weakest pace in at least 27 years.

Brent crude futures <LCOc1> were up 9 cents at $66.57 a barrel by 1333 GMT. The international benchmark hit a session high of $66.84 earlier in the day.

West Texas Intermediate crude futures <CLc1> rose by 13 cents to $59.71 a barrel. The U.S. benchmark hit a session high of $60.02 earlier.

U.S. oil companies on Monday began restoring some of the nearly 74% of production that was shut at platforms in the Gulf of Mexico because of Hurricane Barry.

“Crude oil is having a quiet day today after giving back some of last week’s gains,” Saxo Bank commodity strategist Ole Hansen said.

“U.S. output from the Gulf looks set to increase and … Barry failed to hit refinery assets along the coast.”

Workers were returning to the more than 280 production platforms that had been evacuated. It can take several days for full production to resume.

“You could almost hear the big sigh of relief from oil producers and refiners in the region as the storm passed without causing significant damage,” PVM analyst Tamas Varga said.

The storm will probably result in a noticeable decline in U.S. crude oil stocks this week, analysts at Commerzbank said.

Inventory data will be published by the American Petroleum Institute on Tuesday evening, and by the U.S. Department of Energy on Wednesday.

The market was also weighed down by signs of further increases in output from the United States, which has ridden a wave of shale oil production to become the world’s biggest crude producer, ahead of Russia and Saudi Arabia.

U.S. oil output from seven major shale formations is expected to rise by about 49,000 barrels per day in August, to a record 8.55 million bpd, the U.S. Energy Information Administration said.

Market activity has started to slow as it tends to in July and August, the peak European and U.S. holiday season, Hansen said.

Tension between the United States and Iran over Tehran’s nuclear program kept the market on edge given the potential for a price spike should the situation deteriorate.

Iran’s Supreme Leader Ayatollah Ali Khamenei said on Tuesday Tehran would respond to Britain’s “piracy” over the seizure of its oil tanker in Gibraltar.

“The Iranian tension … still makes any oil bear careful,” Varga said.

(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson/Kirsten Donovan)

Iran’s Zarif warns U.S. of ‘consequences’ over oil sanctions, Strait of Hormuz

FILE PHOTO: Iranian Foreign Minister Mohammad Javad Zarif speaks during a news conference with Iraqi Foreign Minister Mohamed Ali Alhakim, in Baghdad, Iraq, March 10, 2019. REUTERS/Khalid Al-Mousily/File Photo

By Michelle Nichols and Lesley Wroughton

NEW YORK (Reuters) – The United States must be prepared for consequences if it tries to stop Iran from selling oil and using the Strait of Hormuz, Iran’s Foreign Minister Mohammad Javad Zarif warned on Wednesday, while also offering to negotiate prisoner swaps with Washington.

The United States on Monday demanded buyers of Iranian oil stop purchases by May or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.

“We believe that Iran will continue to sell its oil. We will continue to find buyers for our oil and we will continue to use the Strait of Hormuz as a safe transit passage for the sale of our oil,” Zarif told an event at the Asia Society in New York.

Reinforcing Supreme Leader Ayatollah Ali Khamenei’s stance, Zarif warned: “If the United States takes the crazy measure of trying to prevent us from doing that, then it should be prepared for the consequences.” He did not give specifics.

Oil prices hit their highest level since November on Tuesday after Washington’s announcement.

When asked if the U.S. pressure campaign on Tehran was aimed at sparking further negotiations or regime change, Zarif said: “The B team wants regime change at the very least.” He described the B Team as including Israeli Prime Minister Benjamin Netanyahu and Trump’s national security adviser John Bolton.

“It is not a crisis yet, but it is a dangerous situation. Accidents … are possible. I wouldn’t discount the B team plotting an accident anywhere in the region, particularly as we get closer to the election. We are not there yet.”

Zarif suggested possible cooperation with the United States to bring stability to Iraq and Afghanistan, a priority for both Tehran and Washington.

He also said he was willing to swap British-Iranian aid worker Nazanin Zaghari-Ratcliffe, who has been detained in Iran since 2016, for an Iranian woman detained in Australia for the past three years on a U.S. extradition request.

“I feel sorry for them, and I have done my best to help,” Zarif said of Zaghari-Ratcliffe. “But nobody talks about this lady in Australia who gave birth to a child in prison. … I put this offering on the table publicly now – exchange them.”

Zarif then went on to say that Iran had told the U.S. administration six months ago that it was open to a prisoner swap deal, but had not yet received a response.

“All these people that are in prison inside the United States, on extradition requests from the United States, we believe their charges are phony. The United States believes the charges against these people in Iran are phony. Let’s not discuss that,” he said.

“Let’s have an exchange. I’m ready to do it and I have authority to do it,” Zarif said.

(Reporting by Michelle Nichols and Lesley Wroughton; Editing by Chizu Nomiyama and Jonathan Oatis)

Oil hits 2019 high on U.S. plan to tighten squeeze on Iran

FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices jumped more than 2 percent on Monday to a near six-month high, on growing concern about tight global supplies after the United States announced a further clampdown on Iranian oil exports.

Washington said it will eliminate in May all waivers allowing eight economies to buy Iranian oil without facing U.S. sanctions.

“The geopolitical risk premium is back in the oil market, in a big way,” said John Kilduff, a partner at Again Capital LLC in New York. “Most, if not all, legitimate commercial interests will avoid Iran oil purchases. Iran’s flow will be reduced to a trickle.”

Brent crude futures rose $2.07, or 2.88 percent, to settle at $74.04 a barrel. The session high of $74.52 a barrel for the international benchmark was the highest since Nov. 1.

U.S. West Texas Intermediate crude futures climbed $1.70, or 2.66 percent, to settle at $65.70 a barrel. The contract hit $65.92 a barrel, the highest since Oct. 31.

In November the United States reimposed sanctions on exports of Iranian oil but granted waivers to Iran’s eight main buyers: China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece. They were allowed to keep making limited purchases for six months.

U.S. Secretary of State Mike Pompeo reiterated that Washington’s goal was to bring down exports of Iranian oil to zero and said there were no plans for a grace period beyond May 1.

U.S. officials are seeking ways to prevent Iran from circumventing oil sanctions, a senior administration official said.

Iran said the decision not to renew the waivers has “no value” but Tehran was in touch with European partners and neighbors and would “act accordingly,” Iranian news agencies reported, citing the Foreign Ministry.

Another drop in Iranian exports would further squeeze supply in a tight market. The United States has also sanctioned OPEC member Venezuela, and the Organization of the Petroleum Exporting Countries and allied producers including Russia have voluntarily cut output, which has helped raise oil prices more than 35 percent this year.

Iran’s biggest oil customers are China and India. India hopes Washington will allow allies to keep buying some Iranian oil instead of halting the purchases altogether from May, a source familiar with U.S.-India talks said.

Trump said Saudi Arabia and other OPEC nations could “more than make up” for any drop in Iranian oil supplies.

Saudi Arabia said it would coordinate with other producers to ensure an adequate crude supply and a balanced market.

“By and large, we expect the Saudis to up output in likely capping Brent price advances to around the $75-76 area followed by some leveling through much of the spring period,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

 

(Additional reporting by Alex Lawler in London and Henning Gloystein in Singapore; Editing by David Gregorio and Susan Thomas)

Oil prices hit 2019 highs on OPEC cuts and U.S. sanctions

FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. REUTERS/Stringe

By Dmitry Zhdannikov

LONDON (Reuters) – Oil prices rose to new 2019 highs on Tuesday, supported by OPEC supply cuts and falling output from Iran and Venezuela because of U.S. sanctions.

Brent crude oil futures were up 16 cents at $67.70 a barrel at 1415 GMT, having earlier risen to a 2019 peak of $68.20, their highest since November 2018.

U.S. West Texas Intermediate (WTI) futures were at $59.17, up 8 cents from their last settlement. They also touched their highest since November at $59.57.

The Organization of the Petroleum Exporting Countries on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until its next regular meeting in June.

OPEC and a group of non-affiliated producers including Russia, known as OPEC+, cut supply in 2019 to halt a sharp price drop that began in the second-half of 2018 on booming U.S. production and fears of a global economic slowdown.

Saudi Arabia has signaled that OPEC and its allies could continue to restrain oil output until the end of 2019.

“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.

Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.

Venezuela has suspended its oil exports to India, one of its key export destinations, the Azeri energy ministry said on Tuesday, citing Venezuela’s oil minister.

Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch in the future. May Brent prices were around $1.20 a barrel more expensive than for December delivery.

(GRAPHIC: Brent crude oil forward curves – https://tmsnrt.rs/2FlM7YZ)

Outside OPEC, analysts are watching U.S. crude oil production that has risen by more than 2 million barrels per day (bpd) since early 2018, to about 12 million bpd, making the United States the world’s biggest producer ahead of Russia and Saudi Arabia.

Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.

Bank of America Merrill Lynch said that economic “risks are skewed to the downside” and it is forecasting global demand growth of 1.2 million bpd year on year in 2019 and 1.15 million bpd in 2020.

The bank said it expects Brent and WTI to average $70 and $59 a barrel respectively in 2019 and $65 and $60 a barrel in 2020.

(Reporting by Henning Gloystein; Editing Joseph Radford and David Goodman)

Oil prices fall on dip in China demand, surging U.S. output

FILE PHOTO: Oil pumpjacks are seen in Lagunillas, Venezuela May 24, 2018. REUTERS/Isaac Urrutia

By Henning Gloystein and Dmitry Zhdannikov

SINGAPORE/LONDON (Reuters) – Oil prices fell on Friday, as weakening demand in China and surging U.S. output weighed on markets despite supply woes in Venezuela and Iran as well as OPEC’s production cuts.

Brent crude futures were at $76.60 per barrel at 1015 GMT, down 72 cents, or 0.9 percent. U.S. West Texas Intermediate (WTI) crude futures  were down 39 cents, or 0.6 percent, at $65.56.

China’s May crude oil imports eased away from a record high hit the month before, customs data showed on Friday, with state-run refineries entering planned maintenance.

May shipments were 39.05 million tonnes, or 9.2 million barrels per day (bpd). That compared with 9.6 million bpd in April.

Further weighing on prices has been surging U.S. output C-OUT-T-EIA, which hit another record last week at 10.8 million bpd.

That’s a 28 percent gain in two years. It puts the United States close to becoming the world’s biggest crude producer, edging nearer to the 11 million bpd churned out by Russia.

The surge in U.S. production has pulled down WTI into a discount versus Brent of more than $11 per barrel, its steepest since 2015.

“This is occurring because of the rapid increase in production from U.S. shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

MARKET STILL TIGHT

Despite Friday’s falls, Brent remains more than 15 percent above its level at the start of the year.

U.S. investment bank Jefferies said the “crude market is tight and spare capacity could dwindle to 2 percent of demand in 2H18, its lowest level since at least 1984”.

Markets have been tightened by supply trouble in Venezuela, where state-owned oil firm PDVSA is struggling to clear a backlog of around 24 million barrels of crude waiting to be shipped to customers.

More generally, Brent has been pushed up by voluntary production cuts led by the Organization of the Petroleum Exporting Countries and Russia, which were put in place in 2017.

OPEC and Russia meet on June 22/23 to discuss production policy.

On Friday, OPEC’s third-largest producer Iran criticized a U.S. request that Saudi Arabia pump more oil to cover a drop in Iranian exports and predicted OPEC would not heed the appeal.

“It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s export due to their Illegal sanction on Iran and Venezuela,” Iran’s OPEC governor, Hossein Kazempour Ardebili, told Reuters.

(Editing by Dale Hudson)

Farmers worldwide struggle with rising fuel costs

By Stephanie Kelly and Tom Polansek

NEW YORK/CHICAGO (Reuters) – Farmers worldwide are feeling the pinch as fuel costs rise to near four-year highs just as they plant and harvest their fields, eroding agricultural income already hamstrung by depressed crop prices.

The agricultural sector from the United States to Russia, and Brazil to Europe, is seeing profits harmed by the rise in diesel prices. The global oil benchmark, Brent crude, touched $80 a barrel for the first time since late 2014 on Thursday.

Coupled with local economic issues, the increase is making it even harder for many farmers worldwide to turn a profit in the estimated $2.4 trillion agriculture industry, casting a cloud over future investments.

In the United States, fuel accounts for about five percent of farmers’ overall costs, and is hurting margins at a time when farm income is already half that of 2013. Massive harvests have depressed prices of staples such as corn, wheat and soybeans.

Diesel fuel is essential for planting, harvesting, and shipping crops to market. In the United States, farmers will spend an estimated $15.25 billion on fuel and oil in 2018, an 8 percent increase from 2017, U.S. Department of Agriculture data showed.

The price of ultra-low sulfur diesel used for farming equipment and transporting crops has not been this high in May since 2014. Heating oil futures, the proxy for ultra-low sulfur diesel, traded at $2.29 a gallon on Thursday.

Ron Heck, who grows soybeans in Perry, Iowa, said his fuel costs could go up $1,000 to $2,000 during the northern hemisphere’s spring.

“You feel the pain right away,” Heck said.

In Russia, fuel prices for farmers are up 50 percent compared with a year ago, Arkady Zlochevsky, the head of Russia’s Grain Union, a non-governmental farm lobby, told Reuters. Farmers will need to spend more ahead of harvesting, which starts in about a month in Russia, he said.

For a graphic on farmers’ cash expenses, click https://tmsnrt.rs/2rXHHQf

FINANCIAL STRESS

U.S. farms are also factoring in potential losses of income due to a 25 percent tax China announced on major American imports following the U.S. government’s decision to slap duties on steel and aluminum.

“We’re seeing financial stress occurring in agriculture that we probably haven’t seen for a decade or so,” said Scott Brown, director of strategic partnerships at the University of Missouri’s College of Agriculture, Food and Natural Resources. “If diesel prices continue to go higher, it continues to put more pressure on [farmers].”

Net farm income is forecast to fall to $59.5 billion in 2018, an 8.3 percent decline from 2017, according to the USDA. It has fallen by 55 percent since 2013.

In Holly Grove, Arkansas, Tim Gannon paid about $17,000 in February to fill a 7,500-gallon tank with diesel used to run equipment and irrigation. The price increase means it may cost up to 25 percent more, or an extra $4,000, to refill it in coming weeks, he said.

“That’s a fairly significant amount of income to lose,” he said. Gannon has been taking steps to cut his diesel costs over the past year by reducing the number of times he plows, or tills.

In Brazil, farmers are also taking steps to deal with higher costs, as diesel prices have climbed 43 percent in the country since July 2017. Eder Ferreira Bueno, a farmer in grain state Mato Grosso, said increased fuel costs meant he had “no other option but to spend less to treat the soil.” Other farmers might hire fewer workers or delay investment plans, he added.

In neighboring Argentina, the top shipper of soybean meal and oil worldwide, farmers are having to deal with a weakening currency at the same time fuel costs are rising.

“Where the impact is felt greatest is in trucking costs. We are already at a disadvantage when compared to our competitors on freight costs within Argentina,” said David Hughes, a farmer in Buenos Aires province and president of Argentine wheat industry chamber Argentrigo.

In Europe, French grain producers say rising oil costs may have a knock-on effect on fertilizers and crop protection products.

“It comes at a time when things are already difficult for farmers economically,” said Philippe Pinta, head of grain growers group AGPB in Paris.

Wamego, Kansas, farmer Glenn Brunkow said he may lock in diesel prices in advance for the first time ever next year, to avoid the pain of future increases.

“You just kind of all of a sudden realize, ‘Wow, it’s pretty high,'” he said.

(Reporting by Stephanie Kelly in New York and Tom Polansek in Chicago; additional reporting by Sybille de La Hamaide and Valerie Parent in Paris, Polina Devitt in Moscow, Ana Mano and Marcelo Teixeira in Sao Paulo, and Hugh Bronstein in Buenos Aires, Editing by Rosalba O’Brien)

Saudi Arabia says it has seized over $100 billion in corruption purge

A view shows the Ritz-Carlton hotel's entrance gate in the diplomatic quarter of Riyadh, Saudi Arabia, January 30, 2018.

By Stephen Kalin and Katie Paul

RIYADH (Reuters) – Saudi Arabia’s government has arranged to seize more than $100 billion through financial settlements with businessmen and officials detained in its crackdown on corruption, the attorney general said on Tuesday.

The announcement appeared to represent a political victory for Crown Prince Mohammed bin Salman, who launched the purge last November and predicted at the time that it would net about $100 billion in settlements.

Dozens of top officials and businessmen were detained in the crackdown, many of them confined and interrogated at Riyadh’s opulent Ritz-Carlton Hotel.

Well over 100 detainees are believed to have been released.

Billionaire Prince Alwaleed bin Talal, owner of global investor Kingdom Holding, and Waleed al-Ibrahim, who controls influential regional broadcaster MBC, were freed last weekend.

“The estimated value of settlements currently stands at more than 400 billion riyals ($106 billion) represented in various types of assets, including real estate, commercial entities, securities, cash and other assets,” Sheikh Saud Al Mojeb said in a statement.

The huge sum, if it is successfully recovered, would be a big financial boost for the government, which has seen its finances strained by low oil prices. The state budget deficit this year is projected at 195 billion riyals.

In total, the investigation subpoenaed 381 people, some of whom testified or provided evidence, Mojeb said, adding that 56 people had not reached settlements and were still in custody, down from 95 early last week.

The government has generally declined to reveal details of the allegations against detainees or their settlements, making it impossible to be sure how much corruption has been punished or whether the $100 billion figure is realistic.

The only settlement disclosed so far was a deal by senior prince Miteb bin Abdullah to pay more than $1 billion, according to Saudi officials. Miteb was once seen as a leading contender for the throne, so his detention fueled suspicion among foreign diplomats there might be political motives behind the purge.

Although officials said both Prince Alwaleed and Ibrahim reached financial settlements after admitting unspecified “violations”, Prince Alwaleed continued to insist publicly he was innocent, while MBC said Ibrahim had been fully exonerated.

Economy minister Mohammed al-Tuwaijri told CNN this month that most assets seized in the purge were illiquid, such as real estate and structured financial instruments. That suggested the government may not have gained large sums of cash to spend.

In another sign that the investigation was winding down, a Saudi official told Reuters on Tuesday that all detainees had now left the Ritz-Carlton. The hotel, where the cheapest room costs $650 a night, is to reopen to the public in mid-February.

Some detainees are believed to have been moved from the hotel to prison after refusing to admit wrongdoing and reach financial settlements; they may stand trial.

Bankers in the Gulf said the secrecy of the crackdown had unsettled the business community and could weigh on the willingness of local and foreign businesses to invest.

“It’s reassuring if this situation is finally at an end, as the process was not clear from the start and at least if it is now ended, that provides some clarity and closure,” said a banker who deals with Saudi Arabia.

But Prince Mohammed appears to have won widespread approval for the purge among ordinary Saudis, partly because the government has said it will use some of the money it seizes to fund social benefits.

“What has happened is great, it will be counted as a win for the government. Whoever the person is, he is being held accountable, whether a royal or a citizen,” said Abdullah al-Otaibi, drinking at a Riyadh coffee shop on Tuesday.

An international financier visiting the region said authorities’ tough approach might ultimately prove effective.

“There are many different ways to fight corruption and not all of them are effective. Ukraine tried to do it by creating institutions, but that hasn’t really worked as that approach doesn’t change behavior,” he said.

“Saudi’s approach stands a better chance of being effective as it’s more direct.”

(Additional reporting by Sarah Dadouch in Riyadh and Tom Arnold in Dubai; Reporting by Andrew Torchia and Angus MacSwan)

Wall Street kicks off 2018 on a strong note

The trading floor is seen on the final day of trading for the year at the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., December 29, 2017

By Sruthi Shankar

(Reuters) – Wall Street’s main indexes were higher on Tuesday, the first trading day of the year, buoyed by gains in technology and consumer discretionary stocks.

Major stock indexes closed out 2017 with their best performance since 2013, powered by a combination of strong economic growth, solid corporate earnings, low interest rates and hopes of corporate tax cuts.

“The first week of trading usually suggests the overall trend of the markets which we expect to be positive,” Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a note.

Oil prices hovered near their mid-2015 highs on Tuesday amid large anti-government rallies in major exporter Iran and ongoing supply cuts led by OPEC and Russia.

Gold and copper prices continued their upward march, but the greenback began the year on the back foot, with the dollar index slipping to its weakest level since September.

“While we don’t expect the Iranian unrest to reach a full blown political situation just yet, the protest will add to an already positive uptrend in oil and gold prices,” Cardillo said.

December payrolls report, data on manufacturing and service sectors are among leading indicators expected during the week, and will be scrutinized for signs of improving economic health and the number of interest rate hikes this year.

Minutes from the Federal Reserve’s December meeting, when the central bank raised rates for the fourth time since the 2008 financial crisis, will be issued on Wednesday.

At 9:34 a.m. ET (1434 GMT), the Dow Jones Industrial Average was up 112.06 points, or 0.45 percent, at 24,831.28 and the S&P 500 was up 9.49 points, or 0.35 percent, at 2,683.1. The Nasdaq Composite was up 21.51 points, or 0.31 percent, at 6,924.90.

Six of the 11 major S&P sectors were higher, led by gains in technology and consumer discretionary stocks.

Shares of Walt Disney rose 1.6 percent, giving the biggest boost to the Dow, after brokerage Macquire upgraded the company’s stock to “outperform”.

Netflix and Discovery Communications also rose on positive recommendations from Macquire.

Shares of casino operators Wynn resorts, Las Vegas Sands and Melco Resorts Entertainment were down after a report showed lower-than-expected rise in Macau gambling revenue in December.

Abbott Labs jumped 2.6 percent after JPMorgan and Morgan Stanley upgraded the healthcare company’s stock to “overweight”.

Advancing issues outnumbered decliners on the NYSE by 1,938 to 652. On the Nasdaq, 1,678 issues rose and 743 fell.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

World stocks index dips after breaking record, oil near 2-1/2-year high

World stocks index dips after breaking record, oil near 2-1/2-year high

By David Randall

NEW YORK (Reuters) – A global rally in stocks paused on Tuesday, halting a nine-day advance that had sent the most widely tracked index of world stock markets to record highs.

All three of Wall Street’s major indexes dipped in U.S. afternoon trading, sending the MSCI 47-country ‘All World’ index <.MIWD00000PUS> down slightly after it had hit record highs above 500 points after Japan’s Nikkei <.N225> notched its best level since 1992 and Germany’s DAX <.GDAXI> scored a record high. The index is up nearly 20 percent for the year to date.

“You’ve had almost a perfect backdrop for equities,” said Pictet Asset Management’s global strategist Luca Paolini. “You have acceleration in nominal growth, earnings are between 10-15 (percent higher) globally and whatever you look at is pretty much in double digits.”

After hitting all-time highs shortly after the opening bell, the Dow Jones Industrial Average <.DJI> fell 11.21 points, or 0.05 percent, to 23,537.21, the S&P 500 <.SPX> lost 2.8 points, or 0.11 percent, to 2,588.33 and the Nasdaq Composite <.IXIC> dropped 24.31 points, or 0.36 percent, to 6,762.13.

Financial stocks <.SPSY> led the U.S. market lower, with the S&P 500 financial sector losing 1.2 percent, the largest decline of any sector. U.S. Treasury yields hit a two-week low.

Oil prices fell slightly after posting the biggest rise in six weeks following the Saudi crown prince’s move to tighten his grip on power and crank up tensions between the kingdom and Iran.

U.S. crude <CLcv1> fell 0.28 percent to $57.19 per barrel and Brent crude futures <LCOcv1> were last at $63.73, down 0.84 percent after touching a peak of $64.65.

The dollar was also on the move amid signs of more change at the Federal Reserve, while President Donald Trump’s Republican party pushes ahead with its tax cut program.

The dollar index <.DXY> rose 0.24 percent, with the euro <EUR=> down 0.28 percent to $1.1576 – the single currency’s lowest since mid-July. The Japanese yen weakened 0.23 percent to 113.97 per dollar <JPY=>, while sterling <GBP=> was last trading at $1.3153, down 0.13 percent on the day.

The Mexican peso lost 0.83 percent to 19.17 pesos to the U.S. dollar <MXN=>. The Canadian dollar <CAD=> fell 0.61 percent versus the greenback at C$1.28 per dollar.

Benchmark 10-year notes <US10YT=RR> last rose 2/32 in price to yield 2.3127 percent, from 2.32 percent late on Monday.

The 30-year bond <US30YT=RR> last rose 12/32 in price to yield 2.7778 percent, from 2.796 percent late on Monday.

Germany’s 10-year bond yields <DE10YT=RR> held near two-month lows at 0.338 percent after the European Central Bank firmed up its plans to reinvest the proceeds of its 2.5 trillion euro stimulus program. [GVD/EUR]

(Reporting by David Randall; Editing by Dan Grebler and James Dalgleish)

Purge of Saudi princes, businessmen widens, travel curbs imposed

Saudi King Salman bin Abdulaziz Al Saud poses for a photo with National Guard Minister Khaled bin Ayyaf and Economy Minister Mohammed al-Tuwaijri during a swearing-in ceremony in Riyadh, Saudi Arabia, November 6, 2017. Saudi Press

By Stephen Kalin and Reem Shamseddine

RIYADH (Reuters) – A campaign of mass arrests of Saudi Arabian royals, ministers and businessmen widened on Monday after a top entrepreneur was reportedly held in the biggest anti-corruption purge of the kingdom’s affluent elite in its modern history.

The arrests, which an official said were just “phase one” of the crackdown, are the latest in a series of dramatic steps by Crown Prince Mohammed bin Salman to assert Saudi influence internationally and amass more power for himself at home.

The campaign also lengthens an already daunting list of challenges undertaken by the 32-year-old since his father, King Salman, ascended the throne in 2015, including going to war in Yemen, cranking up Riyadh’s confrontation with arch-foe Iran and reforming the economy to lessen its reliance on oil.

Both allies and adversaries are quietly astonished that a kingdom once obsessed with stability has acquired such a taste for assertive – some would say impulsive – policy-making.

“The kingdom is at a crossroads: Its economy has flatlined with low oil prices; the war in Yemen is a quagmire; the blockade of Qatar is a failure; Iranian influence is rampant in Lebanon, Syria and Iraq; and the succession is a question mark,” wrote ex-CIA official Bruce Riedel.

“It is the most volatile period in Saudi history in over a half-century.”

The crackdown has drawn no public opposition within the kingdom either on the street or social media. Many ordinary Saudis applauded the arrests, the latest in a string of domestic and international moves asserting the prince’s authority.

But abroad, critics perceive the purge as further evidence of intolerance from a power-hungry leader keen to stop influential opponents blocking his economic reforms or reversing the expansion of his political clout.

Prominent Saudi columnist Jamal Kashoggi applauded the campaign, but warned: “He is imposing very selective justice.”

“The crackdown on even the most constructive criticism – the demand for complete loyalty with a significant ‘or else’ – remains a serious challenge to the crown prince’s desire to be seen as a modern, enlightened leader,” he wrote in the Washington Post.

“The buck stops at the leader’s door. He is not above the standard he is now setting for the rest of his family, and for the country.”

 

ACCOUNTS FROZEN

The Saudi stock index initially fell 1.5 percent in early trade but closed effectively flat, which asset managers attributed to buying by government-linked funds.

Al Tayyar Travel &lt;1810.SE&gt; plunged 10 percent in the opening minutes after the company quoted media reports as saying board member Nasser bin Aqeel al-Tayyar had been detained in the anti-corruption drive.

Saudi Aseer Trading, Tourism and Manufacturing &lt;4080.SE&gt; and Red Sea International &lt;4230.SE&gt; separately reported normal operations after the reported detentions of board members Abdullah Saleh Kamel, Khalid al-Mulheim and Amr al-Dabbagh.

Saudi banks have begun freezing suspects’ accounts, sources told Reuters.

Dozens of people have been detained in the crackdown, which have alarmed much of the traditional business establishment. Billionaire Prince Alwaleed bin Talal, Saudi Arabia’s best-known international investor, is also being held.

The attorney general said on Monday detainees had been questioned and “a great deal of evidence” had been gathered.

“Yesterday does not represent the start, but the completion of Phase One of our anti-corruption push,” Saud al-Mojeb said. Probes were done discreetly “to preserve the integrity of the legal proceedings and ensure there was no flight from justice.”

Investigators had been collecting evidence for three years and would “continue to identify culprits, issue arrest warrants and travel restrictions and bring offenders to justice”, anti-graft committee member Khalid bin Abdulmohsen Al-Mehaisen said.

 

“THE NOOSE TIGHTENS”

The front page of leading Saudi newspaper Okaz challenged businessmen to reveal the sources of their assets, asking: “Where did you get this?”

Another headline from Saudi-owned al-Hayat warned: “After the launch (of the anti-corruption drive), the noose tightens, whomever you are!”

A no-fly list has been drawn up and security forces in some Saudi airports were barring owners of private jets from taking off without a permit, pan-Arab daily Al-Asharq Al-Awsat said.

Among those detained are 11 princes, four ministers and tens of former ministers, according to Saudi officials.

The allegations against the men include money laundering, bribery, extortion and taking advantage of public office for personal gain, a Saudi official told Reuters. Those accusations could not be independently verified and family members of those detained could not be reached.

A royal decree on Saturday said the crackdown was launched in response to “exploitation by some of the weak souls who have put their own interests above the public interest, in order to, illicitly, accrue money”.

The new anti-corruption committee has the power to seize assets at home and abroad before the results of its investigations are known. Investors worry the crackdown could ultimately result in forced sales of equities, but the extent of the authorities’ intentions was not immediately clear.

 

“OVERKILL”

Among those detained is Prince Miteb bin Abdullah, who was replaced as minister of the National Guard, a pivotal power base rooted in the kingdom’s tribes. That recalled a palace coup in June which ousted his elder cousin, Mohammed bin Nayef, as heir to the throne.

The moves consolidate Prince Mohammed’s control of the internal security and military institutions, which had long been headed by separate powerful branches of the ruling family.

Consultancy Eurasia Group said the “clearly politicized” anti-corruption campaign was a step toward separating the Al Saud family from the state: “Royal family members have lost their immunity, a long standing golden guarantee”.

Yet many analysts were puzzled by the targeting of technocrats like ousted Economy Minister Adel Faqieh and prominent businessmen on whom the kingdom is counting to boost the private sector and wean the economy off oil.

“It seems to run so counter to the long-term goal of foreign investment and more domestic investment and a strengthened private sector,” said Greg Gause, a Gulf expert at Texas A&amp;M University.

“If your goal really is anti-corruption, then you bring some cases. You don’t just arrest a bunch of really high-ranking people and emphasize that the rule of law is not really what guides your actions.”

Over the past year, MbS has become the top decision-maker on military, foreign and economic policy, championing subsidy cuts, state asset sales and a government efficiency drive.

The reforms have been well-received by much of Saudi Arabia’s overwhelmingly young population, but resented among some of the more conservative old guard.

The crown prince has also led Saudi Arabia into a two-year-old war in Yemen, where the government says it is fighting Iran-aligned militants, and into a dispute with Qatar, which it accuses of backing terrorists, a charge Doha denies. Detractors of the crown prince say both moves are dangerous adventurism.

The Saudi-led military coalition said on Monday it would temporarily close all air, land and sea ports to Yemen to stem the flow of arms from Iran to Houthi rebels after a missile fired toward Riyadh was intercepted over the weekend.

Saudi Prince Alwaleed’s investments: http://tmsnrt.rs/2j5fE04

 

(Reporting By Stephen Kalin, Editing by William Maclean)